I run a small private investment partnership, which invests globally with a macro theme. I would say the study of economics is best done in the tradition of the gentleman economists of the past, such as David Ricardo, Adam Smith and John Stuart Mill. Previously, I was an economist and macro strategist for a firm that served institutional investors. My book Gold: the Once and Future Money was released in 2007, and is now available in German, Chinese, Korean and Russian. My opinion pieces have appeared in the Financial Times, Asian Wall Street Journal, Dow Jones Newswires, Worth, Daily Yomiuri, Asia Times, Pravda, Huffington Post, and numerous other print and online publications. I also have a personal website at newworldeconomics.com.

Musings Of A Supply-Sider: What I Like About The Democratic Party

US President Barack Obama celebrates on stage on election night in Chicago on November 6, 2012. (Image credit: AFP/Getty Images via @daylife)

Any serious political observer should be able to list several things they like about any political party. Even the German Nazi party of 1932. Obviously, someone likes the party, or it wouldn’t even exist.

The U.S. Democratic Party, like the Republican Party, is a sclerotic, hidebound antiquity, mostly in thrall to unspoken business interests. Most of the Democratic Party’s historical policy ambitions have already been put in place. The only thing left is some sort of universal healthcare – but the recent proposals along those lines, such as Obamacare, have been hideous. Their idea tank is mostly empty. Nevertheless, the party still wins elections. Here is what I find attractive about the Democrats:

1) They care about most Americans. Most Americans these days are really not so well off. Do Republicans have anything at all to offer those families making less than $100,000 per year (often with both parents working), which is to say, about 80% of them? I think that good conservative economic policy – Low Taxes, Stable Money – is indeed beneficial for all levels of society. However, even as Republican support comes mostly from rural “red states,” Republican leadership seems to have a blind spot for the majority of Americans, seeing them mostly as welfare-state moochers who don’t pay enough taxes.

2) They are less enthusiastic about war. It’s true that Democrats began U.S. involvement in both World War I and World War II, and were largely responsible for the Vietnam War. However, especially in recent years, the Republican Party is plainly the pro-war party.

3) They are less aggressive about the expanding police state. The hideous Patriot Act was passed with support from both parties, but these police-state measures are particularly popular among the fascist wing of the Republican Party.

4) They care about the environment. All meaningful progress towards better environmental policy comes from the Democratic Party. A lot of these environmental ideas are bad ideas, but the Republican Party only offers criticism and resistance, not anything new or better. President Nixon is known for accomplishing a rather impressive list of environment-friendly policies, but the Republicans seem to have abandoned that tradition.

5) They are not pulling away the Safety Net when it is needed most. Despite government propaganda to the contrary, the economy stinks, and it looks like it will soon get worse. Enrollment in existing welfare programs has been soaring. A lot of this is probably undeserved, such as disability benefits given to people with no meaningful disabilities. However, the basic principle of a “safety net” should be maintained. Reforms are best saved for a time when the economy is doing well and unemployment is low.

6) They don’t like “Big Business.” When companies become large, they often gain influence over the government itself, which they use to further their interests in a fashion contrary to the principles of capitalism. They create artificial obstacles for competitors, grow fat on government contracts and corporate subsidy, acquire assets cheaply from the government and dump assets on the government at high prices, foist their losses upon the taxpayer, get special tax or regulatory deals, break laws with impunity and get only wrist-slaps even after the rare prosecution, affect trade policy and foreign policy in their favor, and tweak regulation to allow them to pursue activities that are contrary to the well-being of citizens as a whole. They are crony capitalists.

Not all large companies do this. I would say that Apple, Nike, Applebee’s, Macy’s, Marriott International and United Parcel Service are fine examples of corporate citizenship. But, a lot of large companies do, especially banks, energy companies, defense contractors, pharmaceutical companies, and the grotesque Monsanto. The crony capitalists have the Democratic party in their pocket just like the Republican party, but critics of crony capitalism (such as Noam Chomsky perhaps) find a home left of the center aisle. Although this behavior is completely contrary to conservative principles, prominent critics (like Ron Paul) are typically treated like pariahs. The Republicans have a “don’t ask, don’t tell” policy regarding corporate crime.

7) They reach out to many ethnicities and cultures. There’s nothing inherent in conservative principles that is only attractive to older white males. Many business-friendly places in the world are distinctly non-white, such as Singapore, Dubai or Panama. However, one does get the sense that the Republican Party would rather not have colored people in its country club.

8) They are good placeholders. I don’t think that president Bill Clinton accomplished much of importance during his eight-year tenure. But, he didn’t break anything either. Sometimes, that’s the best option available.

Conservatives might look at this list as a schedule of opportunities. It is not very hard to develop an environmental program, or even a welfare program, that is in line with conservative principles (business-friendly and not too expensive). The truly great conservative parties of history – I particularly like Japan’s Liberal Democratic Party of the 1950s and 1960s – would co-opt the left-leaning opposition’s best ideas, and implement within their conservative framework. There’s a great opportunity for Republicans to implement a universal healthcare system that is actually cheaper than the roughly 8% of GDP the U.S. government already spends on healthcare – more like the 3% spent by Hong Kong and Singapore on their universal health programs. It might even have some Democratic support.

For now, we are in a time of Status Quo stasis. Like all things, this too shall pass, and I don’t think it will take too many more years to get to that point.

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